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Common credit under GST with example

What is common credit?

Input may be used for both taxable and non-taxable supplies in businesses. However, input tax credit (ITC) is available only for GST paid on taxable supplies. So, the portion of ITC that pertains to exempted/personal supplies will have to be removed from the total available ITC. Common credit is the amount available for distribution that arrives after reducing the ITC of taxable supplies from the total ITC. To ascertain the ITC portion related to exempted or personal supplies, common credit will be proportionally distributed.


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TaxGyata Team

TaxGyata Team